After some initial enthusiasm, investors are now having second thoughts about the reflation trade and once again pouring more money into bonds, as inflation is expected to remain low for longer than first appeared. But, when yields on a 70-year sovereign are at 1.65%, something must be seriously wrong and it can all only end in tears. Financial markets…
Although many investors wouldn’t agree with me, I believe that one of the main aberrations in the U.S. stock market is the fact that Tesla Inc (NASDAQ:TSLA) is worth the same as General Motors Company (NYSE:GM), despite the huge differences between them in terms of revenues, profits, margins, market share, operational aspects and financial strength.…
Financial markets have been on an impressive run since Donald Trump was elected in November. The S&P 500 is up 10.7%, the Dow is up 13.1% and the MSCI World (which is a proxy for developed markets) is up 9.9%. Trump’s promises in terms of tax cuts, infrastructure spending, protectionism for US industries, repeal of…
While Europe is recovering from the financial and sovereign crises at a very moderate pace, Iceland seems to have completely reversed one of the worst banking crises ever seen, where three banks with assets in excess of 10x the country’s GDP suddenly collapsed. Almost 10 years after the peak of the crisis, when the central…
Last week we witnessed some interesting global developments that will pave the way forward: populism was somewhat defeated in the Netherlands, the FED hiked its key rate by another 25 basis points, an ECB official hinted at policy normalisation, and the BoE appeared more hawkish than many expected. After more than a decade of sluggish…
In the last few years, passive index investing has grown significantly, as those involved in the investment business try to capitalise on the growing demand for alternative ways of building investment portfolios that bypass both the high fees incurred in active fund management and the knowledge (and money) required to build a well-diversified portfolio. At…
The tone used by the US Federal Reserve to express its attitude towards monetary policy has changed significantly since last December. With the US economy operating near full employment, the emergency stance that guided Ben Bernanke into unchartered territory has now been completely replaced by a more hawkish stance, where the doom and gloom has…
In general, taxpayers try to minimise their contributions to the government budget, either by optimising their tax rate or through trying to delay payments wherever they can. But something strange seems to be happening in Sweden. The country seems to have been gripped by some form of mania that has led the taxpayer to overpay…
One of the worst enemies of a serious long-term investor is a high level of correlation. The main reason for this is that high correlations make all of us the same: you are equal to me and I am equal to Benjamin Graham. We all look fantastically clever or terribly stupid at the same time,…
While acknowledging the ‘Trump pump’ to the oil industry, I have always been sceptical about the long-term prospects for the industry because I believe prices are capped at a much lower level than they were ten years ago. Any excessive enthusiasm is doomed to revert to an even more extreme pessimism in ever shorter periods,…
